Megaport’s quarterly update sends its share price crashing 18%

Shares in Megaport Ltd (ASX: MP1) are crashing this morning after the company released its quarterly key performance indicators for March.

At the time of writing, the Megaport share price is $10.75, down 15.75%. In the first 30 minutes of trading today, it hit a new 52-week low of $10.42 — an 18.3% drop.

Megaport grows revenue 6% this quarter

The company covered its monthly revenue statistics for 3Q FY22, including:

• Monthly recurring revenue (MRR) for the month of March was $9.5 million, an increase of $300,000 or 3% quarter-on-quarter (QoQ)
• Revenue for the quarter was $27.9 million, an increase of $1.4 million or 5% QoQ
• Customer numbers at the end of the quarter were 2,541, an increase of 86, or 4% QoQ
• Total ports at the end of the quarter were 9,012, an increase of 489, or 6% QoQ
• Total virtual cross connections (VXCs) at the end of the quarter were 14,706, an increase of 993, or 7% QoQ
• Total Megaport Cloud Router (MCRs) at the end of the quarter were 670, an increase of 67, or 11% QoQ
• Total Megaport Virtual Edge (MVEs) at the end of the quarter were 59, an increase of 19, or 48% QoQ.

What else happened this quarter for Megaport?

The company launched its full suite of products and services in Mexico. It says this is the “2nd largest IT spending market in Latin America and the 25th country enabled on Megaport’s global platform”.

It also launched the Megaport ONE platform in January 2022 and named Jim Brinksma as Chief Technology Officer last month.

Cash outflows were up for network operations, with a 21% increase from last quarter, whilst the company also realised an increase in gross profit of $1 million.

Cash receipts came in at $29 million versus revenue of $28 million. Megaport had a cash position of $88.8 million at the end of March.

Management commentary

Speaking on the results, Megaport’s CEO, Vincent English, said:

The momentum of our channel program, Megaport PartnerVantage, continues to accelerate since the launch of our partner portal in November, 2021. The team has been highly-focused on partner recruitment and enablement in the past two quarters. As our channel investments are yielding greater
results, we are strengthening our pipeline and increasingly converting more deals from partners across the board. Additionally, our larger strategic partnerships with Arrow Electronics and Cisco contributed to deals in the third quarter. Operationalising these larger partnerships requires commercial, marketing, and development investments to bring our combined capabilities to market and we are very excited to see the impact with these initial deals.

What’s next for Megaport?

Regarding the company’s outlook, English added some additional colour:

Coming into the close of Fiscal Year 2022, we will remain focused on our channel and innovation strategies. Our commercial team will continue to recruit and onboard partners within our PartnerVantage program to sell our Network as a Service offering as part of holistic IT solutions including bundles with cloud service offers. With our recent agreement with Arrow Electronics beginning to produce deals, we are also focusing on operationalising our most recent partnership with TD Synnex, announced in January.

The Megaport team is energized and focused on delivering a solid fourth quarter performance and setting our business up for great momentum heading into Fiscal year 2023.

Megaport share price snapshot

Over the past 12 months, the Megaport share price is down 7%. The new year has been rough with the shares collapsing in value by 43% year to date.

The post Megaport’s quarterly update sends its share price crashing 18% appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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